Shownotes
Every business is unique, and Hallenbeck Coin Gallery is nothing short of that. Taking us into the world of coin dealership, Tom Hallenbeck talks about the processes within their business and how they are coping with the changes. Marrying the past and the present, Tom takes us back to the time he was growing up as a coin collector to managing a full-service coin dealership in this changing time where everything is online. He identifies the three types of collectors out there and gets into the management side of the business – from fostering innovation to taking a creative approach to driving motivation. Finally, Tom reflects on his role as an entrepreneur, breaking down the misconceptions about the coin dealing.
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Managing A Coin Dealership Business In A Changing World with Tom Hallenbeck
I’m Tom Hallenbeck with Hallenbeck Coin Gallery. I serve the Colorado Springs Community as a coin dealer, but also we do estate appraisals. We deal with elder law attorneys. We buy and sell scrap gold and silver. We’re much more than a coin dealer.
Tom, I appreciate you taking time. We have Tom Hallenbeck. He’s the President of Hallenbeck Coin Gallery. Tell us about your business and who you serve?
We’ve been in business for many years. We serve the Colorado Springs Community and throughout the region of the Rocky Mountains. We buy and sell coins and precious metals. We also do estates. The average person we buy from, normally the majority of our advertising is geared toward purchasing. We buy mainly from men and women who have estates or collections they’ve either accumulated or inherited that they want to fairly liquidate.
I’ve driven past this place. I’ve lived in Colorado Springs forever. You think about, “It’s a coin shop.” That’s what’s in my mind. When you talk about serving the community and the estate planning side, what does that look like?
With a lot of estates, somebody inherits a collection whether it’s through a father or grandfather. Usually, it’s the male side of the family. They are collectors more so than women typically. When they get it, they’re like, “What do we do with this thing?” We will go through from pennies, nickels, dimes, all the way through silver dollars, gold coins, value each item and then give it to the estate. We do two types of appraisals. One is the retail or replacement cost. That’s for insurance purposes. Sometimes insurance companies need an appraisal or the person in charge of the estate or the collection needs an appraisal in case a Waldo Canyon fire came through and burned their house down. If there was a robbery, more likely a theft so they need a value for replacement cost. Probably the vast majority of our appraisals are what we call “Fair wholesale appraisers.” What would you get if you were selling that $20 gold piece, your Krugerrand, your set of Lincoln cents? We’d go through that appraisal also.
For a lot of the folks, I don’t think as they look at the front of your building they have an idea of the number of people here. For leadership, the marketing and how you get everybody motivated in a sales process, let’s talk a little bit about it. When you first started, how many people were here?
It started with just my father. We moved to Colorado. He was a curator at the American Numismatic Association, which is the world’s largest coin club and they have a fantastic museum over there. If you’re a coin collector, that’s a thrill of a lifetime. You get to play like a kid in the candy store. That’s why he moved to Colorado. He got laid off in a mass layoff with the Numismatic Association in 1983. He looked around and said he didn’t want to go back to the corporate world, the insurance industry. He said, “What do I do?” He loved coins. He started the coin shop with his own collection. I was in college at the time. I graduated. He had grown a little bit at that point. He offered me a part-time job to work with him. I was always interested in coins even as a child. It was natural to go into it. I thought I would work with him until I could find a real job.
It’s been since 1984 and I’m still looking for that real job. In the meantime, we grew from that, my father, myself and then another employee. I bought my father out years ago. Now, he’s an hourly employee of mine. He still works. He’s 87. He’s got the institutional knowledge. That’s one of those things still of value. I don’t think age is important for collectors. We get kids that are collecting that are nine or ten or people that are World War II veterans that come in that are collecting. There’s no age on that. We’re up to eighteen employees now. Everything from the front end of the shop, which is our retail showroom where we buy collections and we also sell up there gold and silver, also bullion. We have a backend which is our wholesale department. We have a website where we mainly sell certified coins and then we also have an active eBay department where we have a couple of people that are full-time eBayers.
How do you right size your organization? You were talking about some of your philosophy about how you grew your employee base.
I’ve always been a conservative person. Number one, I’m averse to debt. I don’t like to owe a lot of people a lot of money and especially the banks. I’ve tried to pay for it as you go along. I’ve looked at it and tried to evaluate whether that employee is going to bring in money. Something like an eBay side, that person you have to justify what you’re selling. Are they bringing in money? A case like a bookkeeper, they’re not bringing in money. Your IT professional is not bringing in money. Your salesforce is bringing in money. The people that are buying the items, remarketing them up and repackaging them, shipping off either wholesale or retail, those are the people that are going to be making you the money. You have to look at it. We’d been a slow growth but we keep adding employees here and there and then replacing ones. It’s a changing market. We have to keep up with the current market conditions.
As you go through this business, there’s a certain culture that’s associated with the business you’re in. How do you not only observe historical culture but also take and adapt the company like the eBay foray that you’re doing?
That’s being conscious and watching what’s happening around the world. You have to be observant. I go to conventions throughout the world. I was at a convention in Berlin and seeing what’s happening over there and how the Europeans are doing it, how the Asians are doing it and where the market is going. The online side is an expanding and growing area. How do you take advantage of the online side of the business? How can you retail on online? That’s the biggest challenge. eBay is a different version. eBay is obviously an online auction. You put it up there and sell it for whatever it’s going to bring. Whereas if it’s your website, you can control the pricing, you can control the items you put on there and usually it’s the higher quality material that you’re more interested in finding the right collector for it.
For some of the people out there and going like, “I might have a need to come and see you about an old coin collection I’d like to insure,” or any number of those things, what should they do to pursue those objectives with you? What should they see or experience when they come through your front door?
The first thing they should do is probably organize it and have an idea of what they have. A lot of people bring in a tub of stuff with no idea what they have. That’s fine if they have no interest and they want to dump it. A knowledgeable person is always going to feel better about the process. If you know you have a father’s collection of silver dollars, let’s use that as an example, Morgan dollars. If he was an avid collector and collected by every date, mint, mark and condition, most likely they’re going to be much more valuable. There are three types of collections that people have. There’s the true collector, the guy that was out there. I use guy because the majority of collectors are men, but there are quite a few women too. The person went out there and they wanted to fill their silver dollar collection. They bought every Carson City, every Philadelphia, every San Francisco and every Denver Mint. They bought all of the dates and mint marks. They had a good eye and they bought them by the condition. Those are going to be generally fairly valuable coins.
A knowledgeable person is always going to feel better about the process.
There’s the other that is more of the accumulator. We see a lot of the person that was somebody that was a child of the depression and they didn’t trust banks implicitly. They saved every silver dime, every silver quarter, every silver half dollar they could. They saved wheat pennies, and maybe they bought a gold coin here or two along the way. Those are going to have value too and it could be just a silver. You hoped that they got lucky and got something of value in there. There’s the last is the hoarder that saved everything, and they save bicentennial quarters, bicentennial half dollars, Susan B. Anthony dollars and stuff. We have a lot of that. We give a lot of stuff back and say, “Deposit this at your bank. There’s no collector base for this.” These are worth double face value and these are worth ten times face value. This one coin, this is your key. This is your three-legged buffalo that’s worth $850. That’s what we’re always hoping for.
They come in and I’m assuming they’ll make an appointment.
I’d say probably about a third make an appointment and probably two-thirds walk in.
Somebody greets them and they say, “I have this collection.” There’s the process they go through and you go, “You have something, nothing or somewhere in between.”
We sort it out. Luckily, this is probably the best thing to do when I took this from my father is we did fully computerize everything in 2012. It updates the spot price of gold instantaneously and the price of silver. We have all of those values and put them in the computer system. Whether it’s a 1973 proof set that’s worth $4 or a modern silver eagle with $16.50 or a one-ounce gold eagle worth $1,292 and it puts it all in there and it does all the adding up and everything there. The only real requirement is you have to be at least age 21 and we do have to fill out a police report. Everything is reported to the police in case it was stolen. It goes through a company called LeadsOnline, which all the police departments throughout the United States get. They can monitor if you are a prime suspect in a crime or something to that effect.
In my opinion the coin business had a stuffy stage, stolid type reputation. Innovation has arrived in your industry. What did you do to incorporate, promote or foster innovation in your business?
I’d like to think that by going overseas and seeing some of these foreign men, I try to pay attention to what they’re doing and who they’re gearing their clients. They have large marketing departments, whether it’s The Royal Mint in England or the Royal Canadian Mint in Canada or Deutsche Mint. They look at who they are marketing to or the United States Mint. They’re gearing it towards younger people. They are looking for a new collector. How do they bring collectors in? They’re making material, whether it’s proof silver eagles, proof cents or commemoratives for whatever event, World War I, and they’re gearing their commemoratives for that. We have to follow what the mints are doing, which are the producers in our industries, we’re the secondary market and then follow what they’re doing and try to copycat a little bit what they’re doing. They’re good at what they do, these foreign mints. They have the map of massive marketing departments and there are millions of collectors throughout the world. We piggyback a little bit on top of what they do.
Of the things I would have thought of, I wouldn’t have thought of a marketing department for a mint. It’s not in my vocabulary, that’s cool to know. For you going from the first generation, the second generation and you got to watch your dad build a business, then you bought the business for him. If you were to talk about the best thing you do in your management insights, what would that be?
I wasn’t trained to be a business owner or trained to be a business manager. I worked my way into it. Ours is more of a family business. I treat all our employees like family. I like to be as flexible as possible with all of them. My management style is I’m hands-on. I work on the coins. I help customers out upfront and a lot of what we do is stories. It’s not just a coin. A coin is a coin and it has X value, but a lot of times the coin has much more value if there’s a pedigree or something on it that makes the coin more interesting. It’s not just that item. I’ve always been a manager that relies on my key employees. I’ve two people that have been here both many years and the internet side. I let them do what they need to do, but at the same time we have a meeting so we’re all on the same page. We have weekly meetings to make sure we’re all focused on the same goals.
We talked a little bit about the human resource side of the house and how that contributes to the success and so on. You had an insight that many would probably love to hear.
I had a business consultant come in and give me some advice. I was a little skeptical about him having to come in, but I thought why not? I paid a little bit of money. I had him come in and evaluate our business. He came out with a thing that I don’t like the management or the human resource side. I enjoy the coins, the stories, the history and the money aspect of it. The human resource side is the part I enjoy the least. He said, “Why don’t you get rid of that?” I hired a management company that does my human resource side. I still do the hiring, but they will give us direction on how to do the hiring. They’ll give us candidates.
They take care of the payroll, the 401(k), the retirement plan, all of those things that is important to do. I don’t want to spend all my time on the computer, doing paperwork and compliance issues whether it’s 1099s or Form 8300s. There are many forms and paperwork that is involved. That’s also something I’m not making money. If I’m doing paperwork and filling out 401(k) reports, that’s detrimental to the business. I would rather pay somebody else to do that and that’s what I did. It’s made life much easier. I use a company here in Colorado called ERC, which is Employer’s Resources of Colorado and they take care of my human resources portion of the business, and it’s been a blessing to me.
Know what you do best and know where your money comes from. Delegate what you hate or are not good at or don’t contribute to the bottom line. Looking at the business, there’s been an evolution of what you do and there’s some level of creativity that you brought to the table here. If you were to say what’s the key component or the most important creative approach that you take your business, what would that be?
I would say probably the biggest thing after I bought from my dad several years ago, my father luckily did step back. He said, “You bought this,” and he relinquished control and he allowed me to make decisions. We were only six employees at the time. He let me make the decisions. We were not computerized at all at the time because he’s the generation that didn’t do that. We got into the eBay and the other aspects, the computers, but we also changed our whole marketing. Back in the day, we marketed through Yellow Pages or the newspaper.
Coin Dealership: Know what you do best and know where your money comes from.
Do you want to have a grip on that too?
We still do small Yellow Page ads, but that’s more for the small rural communities where they don’t have high internet speed, where there are some older retirement communities. We went in a new direction and probably the most interesting thing we did was we started television commercials. We are on the local news. We do Monday through Friday in two of the stations. We have a precious metals report, gold, silver and platinum prices. One of the stations also puts the stock prices on there so it blends the gold with the stock market because everyone else is not doing anything like that. We also do a series of commercials where we’re always running two commercials simultaneously. We update them. For a long time, it was ship your mail into the gold or ship your gold to companies far off somewhere, put it in a package and send those to them and get a check back.
There were a lot of the gold buyers that were coming into town. We were trying to look for ways of going against those. Luckily, we got in the market before them and we paid more than they did. We advertise and the television made my daughter a little celebrity. It raised the profile of our business. The main thing is we always run two commercials all the time. One is a branding commercial. That’s basically who we are, what we are and how long we’ve been in business. We’ve always done a version of that. We update it. The other commercial is something usually what is most relevant at the time, which has been in the past buying collections. What we buy, what are we interested in, gold or silver, flatware sets, scrap gold and things to that effect. We’ve done a series of commercials and I find them to be highly effective.
It’s nice to know that you have a return on investment for the branding effort.
The other is on the internet. How do you advertise on the internet? There are many people that are always trying to take your money here and there and you have to sit back and evaluate. Do you want to go with Yelp? Do you want to go with Yellow Pages? How do you do that? You have to do your own analysis based upon you doing Google clicks. Are you getting pay-per-click? How were you doing that and which is your best return for investments? That’s what varies a lot by a business. Our hint for the television as we always advertise on two of the three major channels between ABC, CBS and NBC. Do two of the three and always keep one in the wings wanting. You’ll switch over and you’ll add one and take one off.
In thinking about the heart of your business and growth, you’re an entrepreneur. For a person that’s either starting a business, taking over a second generation business, what hints would you offer...
